Solved

Suppose the MPC in the Economy in Figure 10

Question 110

Multiple Choice

Suppose the MPC in the economy in Figure 10.2 equals 0.8 and the shift from AD<sub>0</sub> to AD<sub>1</sub> was caused by a decrease in investment of $30 billion.What will the total decrease in aggregate demand be (i.e. ,AD<sub>0</sub> to AD<sub>2</sub>) as a result of the initial $30 billion decrease? A) $37.5 billion. B) $130 billion. C) $150 billion. D) $240 billion. Suppose the MPC in the economy in Figure 10.2 equals 0.8 and the shift from AD0 to AD1 was caused by a decrease in investment of $30 billion.What will the total decrease in aggregate demand be (i.e. ,AD0 to AD2) as a result of the initial $30 billion decrease?


A) $37.5 billion.
B) $130 billion.
C) $150 billion.
D) $240 billion.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q105: If aggregate demand shifts to the left

Q106: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5720/.jpg" alt=" Refer to Figure

Q107: The consumption function will shift when<br>A)Autonomous consumption

Q108: In a purely private economy,the difference between

Q109: Calculate the total change in aggregate demand

Q111: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5720/.jpg" alt=" Suppose the MPC

Q112: How does an inflationary gap occur?

Q113: How can an event such as the

Q114: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5720/.jpg" alt=" In Figure 10.1,which

Q115: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5720/.jpg" alt=" Suppose the MPC